politics and corporate governance aula 8 ciência política cgae fgv-eaesp
TRANSCRIPT
Politics and Corporate Governance
Aula 8Ciência Política
CGAE FGV-EAESP
Topics
1) Corporate Governance: Definition, Concepts, and Propositions for Management
2) Aggregate Analysis: Politics and Corporate Governance (Sinn & Gourevitch, 2006)
3) Alternatives to Aggregate Analysis:a) Concepts/Categories b) Small n comparisonsc) Case Studies
4 Conclusions: Politics & Corporate Governance
5 Bibliography
1) Definition: Corporate Governance
2004 OECD Principles of Corporate Governance,
“corporate governance involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders. Corporate Governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined” (OECD 2004: 11).
Marco Zero = Bearle & MeansThe Modern Corporation and
Private Property, (1932)2 Book I, Property in Flux : 2.1 I Property in transition
– 2.2 II The appearance of the corporate system
– 2.3 III The concentration of economic power
– 2.4 IV The dispersion of stock ownership
– 2.5 V The evolution of control
– 2.6 VI The divergence of interest between ownership and control
3 Book II, Regrouping of Rights: 3.1 I Evolution of the modern corporate structure
– 3.2 II Power over participation accruing to shares of stock
– 3.3 III Power over the routing of earnings as between shares of stock
– 3.4 IV Power to alter the original contract rights of security holders
– 3.5 V The legal position of management
– 3.6 VI The legal position of "control“
– 3.7 VII Corporate powers as powers in trust
– 3.8 VIII The resultant position of the stockholder
4 Book III, Property in the Stock Markets : 4.1 I The function of the public market
– 4.2 II Flotation and bankers' disclosure
– 4.3 III Disclosure by the corporation to the market
– 4.4 IV Management in the market
5 Book IV, Reorientation of Enterprise : 5.1 I The traditional logic of property
– 5.2 II The traditional logic of profits
– 5.3 III The inadequacy of traditional theory
– 5.4 IV The new concept of the corporation
Instituto Brasileiro de Governança Corporativa
http://www.ibgc.org.br/Home.aspx
Fonte: Governança Corporativa: Padrões Internacionais e Evidências Empíricas no Brasil nos Anos 90, Nelson Siffert Filho http://www.fundoamazonia.gov.br/SiteBNDES/export/sites/default/bndes_pt/Galerias/Arquivos/conhecimento/revista/rev906.pdf
Propriedade Dispersa = Sem Acionista >20%, Propriedade Dominante = Algum Acionista 20-50%Propriedade Familiar = Membros de Familia / Fundação >50%Outras = >50% Ações
GRUN, Roberto. Convergência das elites e inovações financeiras: a governança corporativa no Brasil. Rev. bras. Ci. Soc. [online]. 2005, vol.20, n.58, pp. 67-90. ISSN 0102-6909.
Variedades de Governança Corporativa?
Academy of Management Review, 2003, Vol. 28, No. 3, 447–465.
Aggregate Analysis: Shinn & Gourevitch, Politics and Corporate
Governance, Princeton University Press, 2006
3 Theories about Aggregate Relations:
Varieties of Capitalism (VOC) vs
Minority Shareholder Protection (MSP) vs
Quality Corporate Law (QCL)
Aggregate Analysis: Market Capitalization & Shareholder
Protection
Aggregate Analysis:Foreign Investment & Shareholder
Protection
Aggregate Analysis:Private Pension Assets & Shareholder
Protection
Alternative to Aggregate Analysis:
Small-n Comparisons
Question: If France > Germany in Corporate Governance, what impact in markets & Development?
Alternative to Aggregate Analysis:
Case Studies
Martin Höpner, “Corporate Governance in Transition: Ten Empirical Findings on Shareholder Value and Industrial Relations in Germany”
Max-Planck-Institut für Gesellschaftsforschung, Köln
MPIfG Discussion Paper 01/5
Shareholder Orientation Index/% Shareholding by Institutional
Investor
Análise de Redes
Höpner, Martin/ Krempel, Lothar (2003): Ein Netzwerk in Auflösung: Wie die Deutschland AG zerfällt, in: MPIfG-Jahrbuch 2003/04, Köln 2004, S. 9-14.
Mendes-Da-Silva, Wesley. Conselhos de Administração no Brasil e Redes Sociais
“Deutschland AG” Source: Höpner, Martin/ Krempel, Lothar (2003): Ein Netzwerk in Auflösung: Wie die
Deutschland AG zerfällt, in: MPIfG-Jahrbuch 2003/04, Köln 2004, S. 9-14.
1997
1) Concepts2) Small-n Comparisons3) Case Studies
“Global Forces, Political Mediation, and the Fragmentation of Corporate Governance Patterns: The Cases of France, Japan, and Korea”
Yves Tiberghien, Harvard Academy & WCFIA, work in progress, 2004
Alternatives to Aggregate Analysis and Sociology of Networks (REDES):
Concepts: Outsider vs Insider Systems
“outsider systems” = UK, Canada, Australia, New-Zealand, US
“insider systems” = other OECD, most non-OECD countries
Outsider - Liberal Anglo-Saxon systems: Direct financing through capital markets, Dispersed corporate ownership,Flexible labor markets. Liberal Arts Generalist Education Systems
Insider - Non liberal systems: Complementary set of industrial organization (large
groups, cross-shareholdings),Stable employment practices, Bank-centered corporate finance, Welfare corporatism.Technical-Vocational Education Systems
Japan: Corporate Governance Reforms
Foreign Equity Inflows
BOLD = Institutional Change or major political signals with a significant impact on the process of corporate reforms, i.e. Political decision (Diet, Cabinet, Coalition)
Politics Corporate Governance?
Critical Idea: if too many variables, not enough cases (statistics, experiment not possible) THEN CASE STUDIES AND SMALL N COMPARISONS OFTEN REVEAL
“PATH DEPENDENCE” 4 Causal Paths:1) political entrepreneurship, 2) bureaucratic mediation, 3) institutional boomerang, 4) shareholding activist organizations
1st path: political entrepreneurship
Party leaders rise above position: gamble = shift blame of reforms to others reach out to voters
stay in power until reform benefits visible.
Prime Minister Junichiro Koizumi in Japan: pro-investor reform program against the majority of his own party.
Able to keep enough party support to pass legislation by enlarging the support base of his party, shifting the blame to opponents to reforms (who thus limit the benefits of reforms) and cultivating groups of lawmakers.
Political Entrepreneurship Path: France & Korea
France: Dominique Strauss-Kahn & Laurent Fabius in France: pushed a pro corporate governance agenda as finance ministers vs majority of socialist party.
Tied (corp. gov.) reforms with other policies that strengthened social rights (35-hour work week, law of social modernization to tighten anti-layoff regulations).
Left Voter Split to Far Left PartiesSocialist Party LOOSES 2002 Presidential Election
Korea: President Kim Dae-JungUsed 1997 Financial Crisis Hurry Corporate
Governance Reforms
Path 2: bureaucratic mediation (unique to state-coordinated
systems)
Government bureaucracy includes cross-sectoral elites (Treasury in France, METI and MOF in Japan) with superior training, extended networks, and long-term time horizons.
France & Japan as models: Liberalize, capitalize, but retain banks/long-term...
Mettenheim, Kurt. “European Banking: A Review of Trends and Policies for Reassessment of Bank Reform and Sustainable Development in Brazil and Latin America.”
Paper to be presented at International Seminar: Financial Institutions, Markets, and Ethics: Mixed Approaches
in the European Context. Panel: Financial and Banking Transformation in a Macro
Perspective.European University Institute, Florence, 25-6 May 2007
Path 3: institutional boomerang:
Elite bureaucrats & political entrepreneurs international institutions/markets
encircle opponents or penetrate strongholds with a Troyan horse.
Examples: France: Recourse to European Union in in the 1980s and mid-1990s)
Korea: IMF agreement in the wake of 1997 financial crisis.
Theory: “Boomerang” = Domestic International Domestic Politics (Sikkink & Keck, 1996)
Path 4: shareholder-activist & NGOs
Example 1: 2001 victory of small French association for the defense of minority shareholders (ADAM) over traditional corporate interests blocked merger between Schneider Electric & Legrand.
(Alliance: International Investors & Shareholder Activists).
Example 2: Economic Democratization Committee, People’s Solidarity for Participatory Democracy (PSPD) (Jang Ha-sung, Finance Professor, Korea University),
Denounce chaebols’ attempt to cheat trust fund investors.
Alternative to Aggregate Analysis: Case Studies
Yet another key concept: “Fallacy of Aggregation”
If Plot Corporate Governance CONCEAL CAUSAL FORCES
Lijphart: If Too Many Variables & Too Few Cases Case Study & Comparative Method
Conclusions: Politics & Corporate Governance
1. Different TYPES of corporate governance and change. 2. Reforms everywhere: NEITHER CONVERGENCE NOR STABLE
DIVERGENCE.3. Change = Convergent components and enduring stickiness
in political economic systems.4. Two external forces: converging international codes and
equity markets.5. States = regulators and referees in intensely political
processes.6. Coalition politics & partisan politics not enough: political
entrepreneurship, bureaucratic mediation, institutional boomerang, and shareholding activist organizations.
7. Case Studies (France, Japan, Korea): Reform = irregular bouts, unstable transitional equilibria. (elite-mediated reforms grassroots/party backlash new reforms.
8. Unstable triad of opposite poles: political interests, economic efficiency, and global norms.
Bibliography
Ahmadjian, Christina, and Gregory Robbins. 2002. “A Clash of Capitalisms: ForeignShareholders and Corporate Restructuring in 1990s Japan”. Working Paper 203. NewYork: Columbia Business School (September)Albert, Michel.1991. Capitalisme Contre Capitalisme. Paris: Editions du SeuilAllen, Franklin and Douglas Gale. 2003. “A Comparative Theory of Corporate Governance”.Presentation at the Policy Symposium on Corporate Governance from an InternationalPerspective: Diversity or Convergence, Research Institute of Economy, Trade andIndustry, IAI, January 10, 2003, TokyoAoki, Masahiko, and Ronald Dore. 1994. The Japanese Firm: Sources of Competitive Strength.Oxford: Oxford University PressAoki, Masahiko. 2002. “Japan in the Process of Institutional Change”. Miyakodaori: Letter fromthe Capital. Tokyo: RIETIBayoumi, Tamin and Charles Collyns, eds. 2000. Post-Bubble Blues: How Japan Responded toAsset Price Collapse. Washington DC: International Monetary FundBerle, Adolf and Gardiner Means, Jr.. 1932. The Modern Corporation and Private Property.Besson, Eric. Depute. 12 Avril 2000. Rapport: Nouvelles Regulations Economiques. Tome I:Examen des Articles. Assemblee NationaleBlack, Bernard and Hasung Jang and Woochan Kim. 2003. “Does Corporate Governance
AffectFirm Value? Evidence from Korea”. Presentation at the Policy Symposium on CorporateGovernance from an International Perspective: Diversity or Convergence, ResearchInstitute of Economy, Trade and Industry, IAI, January 10, 2003, Tokyo
Blustein, Paul. 2001. The Chastening: Inside the Crisis that Rocked the Global Financial Systemand Humbled the IMF. New York: Public AffairsBoyer, Robert, and Rogers Hollingsworth, eds. 1997. Contemporary Capitalism. Cambridge:Cambridge University PressCalpers. March 17, 1997. France Market Principles. http://www.calpers-governance.orgCioffi, John and Martin Höpner. 2004. “The Political Paradox of Finance Capitalism: Interests,Preferences, and Center-Left Party Politics in Corporate Governance Reform”.Unpublished PaperClaessens, Stijin and Joseph Fan. 2003. “Corporate Governance in Asia: A Survey”Clifford, Mark L. 1998. Troubled Tiger: Businessmen, Bureaucrats, and Generals in SouthKorea. New York: M.E. SharpeCoffee, John. 1999. The Future as History: The Prospects for Global Convergence in CorporateGovernance and its Implications. The Center for Law and Economic Studies, ColumbiaUniversity School of Law. Working Paper No. 144Crouch, Colin, and Wolfgang Streeck, 1997. Political Ecconomy of Modern Capitalism:Mapping Convergence and DiversityDore, Ronald and Suzanne Berger, eds.1996. National Diversity and Global Capitalism. Ithaca:Cornell University Press.Dore, Ronald. 1998. “The Reform Debate in Japan: Patriotic Concern or Class Interest? OrBoth? Working Paper 16. Ferrara: Universitia degli Studi di Ferrara.Dore, Ronald. 2000. Stock Market Capitalism: Welfare Capitalism. Oxford: Oxford UniversityPress
Fanto, James. 1995. “The Transformation of French Corporate Governance and United StatesInstitutional Investors”. Brooking Journal of International Law, Vol.1.Forrester, Viviane. 2000. Une Etrange Dictature. Paris: editions FayardGlobal Proxy Watch. Various Issues 2000-2001. Davis Global Advisers Inc.Goldstein, Morris. 1998. The Asian Financial Crisis: Causes, Cures, and Systemic Implications.Washingon, DC: Institute for International EconomicsGordon, Philip and Sophie Meunier. 2001. The French Challenge: Adapting to Globalization.Washington, DC: Brookings PressHaggard, Stephen. 2000. The Political Economy of the Asian Financial Crisis. Washington, DC:Institute for International EconomicsHall, Peter and David Soskice, eds. 2001. Varieties of Capitalism: The Institutional Foundationsof Comparative Advantage. Oxford: Oxford University Press.Hancke, Bob. 2001. “Revisiting the French Model: Coordination and Restructuring in FrenchIndustry” in Hall, Peter and David Soskice, eds. 2001. Varieties of Capitalism: TheInstitutional Foundations of Comparative Advantage. Oxford: Oxford University Press.Hoshi, Takeo, and Anil Kashyap. 2001. Corporate Financing and Governance in Japan.Cambridge and London: MIT PressIMF. December 24, 1997. Letter of Intent of the Government of Korea. www.imf.orgInagami, Takeshi. 2001. “From Industrial Relations to Investor Relations? Persistence andChange in Japanese Corporate Governance, Employment Practices and IndustrialRelations”. Social Science Japan Journal 4:2, 225-241Iversen, Torben, Jonas Pontusson, and David Soskice. 2000. Unions, Employers, and CentralBanks: Macro-Economic Coordination and Institutional Change in Social MarketEconomies. Cambridge: Cambridge University PressIzraelewicz, Erik. 1999. Le Capitalisme Zinzin. Paris: GrassetJackson, Gregory. “Corporate Governance in Germany and Japan: Liberalization Pressures andResponses during the 1990s” in Yamamura, Kozo & Streeck, Wolfgang, eds. 2003. TheEnd of Diversity? Prospects for German and Japanese Capitalism. Ithaca and London:Cornell University Press.JETRO. 1999. Focus Newsletter. April 30, 1999.Joh, Sung-Wook. November 1999. “The Korean Corporate Sector: Crisis and Reform”. KoreanDevelopment Institute Working Paper. No. 9912
Katz, Richard. 1998. Japan: the System that Soured. New York: M.E. SharpeKatz, Richard. 2003. Japanese Phoenix: the Long Road to Economic Revival. Armonkm, NewYork and London, England: M.E. SharpeKatzenstein, Peter.1985. Small States in World Markets. Ithaca: Cornell University Press.Keohane, Robert, and Helen Milner, eds. 1996. Internationalization and Domestic Politics.Cambridge: Cambridge University PressKie-Chiang Oh, John. 1998. Korean Politics. Ithaca: Cornell University PressKim, Byung-Kook. 2000. “The Politics of Crisis and a Crisis of Politics: the Presidency of KimDae-Jung” in Oh, Kongdan ed. Korea Briefing 1997-1999: Challenges and Change at theTurn of the Century. New York: M.A. SharpeKim, Samuel ed. 2000. Korea’s Globalization. Cambridge: Cambridge University PressKorea Institute for International Economic Policy (KIEP). December 1998. Adjustment Reformsin Korea since the Financial Crisis: December 1997-June 1998. KIEP Policy Paper No.98-02. Korea: KIEPKorea Institute for International Economic Policy (KIEP). June 1998. Korea’s Economic ReformMeasures under the IMF Program: Government Measures in the Critical First SixMonths of the Korean Economic Crisis. KIEP Policy Paper No.98-01. Korea: KIEPKorean Economic Institute of America. 2000. The Korean Economy in an Era of GlobalCompetition: Symposium Sponsored by Georges Washington University, the KoreanEconomic Institute of America, and the Korean Institute for International EconomicPolicy. Joint US-Korea Academic Studies. Volume 10Korean Economic Institute of America.1999. Korean and the Asian Economic Crisis, One YearLater: Symposium Sponsored by Georges Washington University, the Korean EconomicInstitute of America, and the Korean Institute for International Economic Policy. JointUS-Korea Academic Studies. Volume 9Korean Stock Exchange (KSE). “Shareownership by Types of Investors”. Various Issues, 1999-2001.La Porta, R. and F. Lopez-de-Silanes, A. Shleifer, and R. Vishny. 1997. “Legal Determinants ofExternal Finance”. Journal of Finance. Vol. 52, pp. 1131-1150La Porta, R. and F. Lopez-de-Silanes, A. Shleifer, and R. Vishny. 1998. “Law and Finance”.Journal of Political Economy. Vol. 107, pp. 1113-1155La Porta, R. and F. Lopez-de-Silanes, A. Shleifer, and R. Vishny. 1998. “Corporate OwnershipAround the World”. Journal of Political Economy. Vol. 54, pp. 471-517
Legifrance Journal Officiel. May 15, 2001. Loi no 2001-420 du 15 Mai 2001 relative auxnouvelles regulations economiques.Levy, Joaquim. 2000. "Financial Reorganization and Corporate Restructuring in Japan" inBayoumi, Tamin and Charles Collyns Ed. 2000. Post-Bubble Blues: How JapanResponded to Asset Price Collapse. Washington DC: IMF. Pp.182-183.Lincoln, Edward. 2001. Arthritic Japan: the Slow Pace of Economic Reform, 2001. WashingtonDC: The Brookings InstitutionMayer, Colin. 2003. “Law, Finance and Economic Performance: Implications of RecentDevelopments for Japan”. Presentation at the Policy Symposium on CorporateGovernance from an International Perspective: Diversity or Convergence, ResearchInstitute of Economy, Trade and Industry, IAI, January 10, 2003, TokyoMETI. 2001. "Sangyo Katsuryoku Saisei Tokubetsu Sochi Ho no Nintei Ichiran Hyo" (SummaryTable on the Authorization Process in the Special Measures for the Revitalization ofIndustrial Competitiveness). http//www.meti.go.jpMinistry of Finance. “Tai nai, tai gai shoken toshi no keiko” (Annual Analysis of Trends inCapital Flows) http://www.mof.go.jp/shoutou/1c009ap3.htm)MITI. "Sangyo Katsu Ryoku Saisei Tokubetsu Sochi Ho no Ranyou" (Key Points of the Law onSpecial Measures for the Revitalization of Industrial Competitiveness), final versiondated November 1999Nestor, Stilpon and John Thompson. 2001. “Corporate Governance Patterns in OECDEconomies: Is Convergence Under Way?”. In OECD, ed., Corporate Governance inAsia: A Comparative Perspective. Paris: OECDNitta, Michio. 2001. “Corporate Governance, Japanese Style: Role of Employees and Unions”.in Social Science Japan. MarchNoble, Gregory and John Ravenhill, eds. 2000. The Asian Financial Crisis and the Architectureof Global Finance. Cambridge: Cambridge University PressOECD. 2004a. Corporate Governance: A Survey of OECD Countries. Paris: OECDOECD. 2004b. OECD Principles of Corporate Governance. Paris: OECDOECD. 2003. White Paper on Corporate Governance in Asia. Paris: OECDOECD. 2003. Experiences from the Regional Corporate Governance Roundtables. Paris: OECDOECD. 1999. Principles of Corporate GovernanceOECD. 1999. OECD Principles of Corporate Governance. Paris: OECDOECD. 1998. Corporate Governance: Improving Competitiveness and Access to Capital in
Oh, John Kie-Chiang. 1999. Korean Politics. Ithaca: Cornell University PressPempel, T.J. ed. 1999. The Politics of the Asian Economic Crisis. Ithaca: Cornell U PressRoe, Mark. 2003. Political Determinants of Corporate Governance: Political Context, Corporate Impact. Oxford: Oxford
University PressRosenbluth, Frances and Ross Schaap. 2003. “The Domestic Politics of Banking Regulation”. International Organization
57:2 (Spring): 307-336Shirota, Jun. 2002. Nihon no Kabushiki Shijo to Gaikokujin Toshika (Foreign Investors in theJapanese Stock
Market).Tokyo: Toyo Keizai ShinbushaSimmons, Beth. 2001. “International Politics of Harmonization”. International Organization 55:3 (Summer): 589-620Streeck, Wolfgang, and Kozo Yamamura. 2001. The Origins of Nonliberal Capitalism. Ithaca:Cornell University PressTakahashi, Ryoko and Tsuyoshi Oyama. 2000b. “Insights into a Recent Increase in ForeignDirect Investment in Japan”.
Bank of Japan Working Paper 00-14Tiberghien, Yves. 2002a. Political Mediation of Global Economic Forces: the Politics of Corporate Restructuring in
Japan, France, and South Korea. Ph.D. Dissertation. Stanford: Stanford University (April)Tokyo Stock Exchange. 2004. Shareownership Surve.y. http:wwwtse.or.jp [last accessed on June 17, 2004].Tong, Daochi. 2003. “Comparative Corporate Governance: The Case of Chinese Publicly Listed Companies”.
Presentation at the Policy Symposium on Corporate Governance from na International Perspective: Diversity or Convergence, Research Institute of Economy,
Trade and Industry, IAI, January 10, 2003, Tokyo Yamamura, Kozo & Streeck, Wolfgang. 2003. “Introduction: Convergence or Diversity?
Stability and Change in German and Japanese Capitalism” in Yamamura, Kozo & Streeck, Wolfgang, eds.,. The End of Diversity? Prospects for German and Japanese Capitalism. Ithaca and London: Cornell University Press.
Yoo, Seong-Min. 1999a. “Corporate Restructuring in Korea: Policy Issues Before and During the Crisis”. Korean Development Institute Working Paper. No. 9903. Seoul: KDI
You, Jong-Keun. 1999. “Paradigm Shift in Korea” in Korean Economic Institute of America. Korean and the Asian Economic Crisis, One Year Later: Symposium Sponsored by Georges Washington University, the Korean Economic Institute of America, and the Korean Institute for International Economic Policy . Joint US-Korea Academic Studies. Volume 9
Zysman, John. 1983. Governments, Markets, and Growth: Financial Systems and the Politics of Industrial Change. Ithaca and London: Cornell University Press